By Jeff Deiss, CFP, AEP, Wealth Advisor
Original Content by ACM Wealth
Financial elder fraud today is a sophisticated endeavor and it can happen to anyone. I’ve received three bogus email alerts myself this week claiming to be from my bank. I also regularly hear the conversations my wife or her brothers are having with my 92-year old father in law over a recent scam he narrowly avoided. We have had to fix some issues for him, but we’ve avoided any major problems because we are aware of risk, discussing it regularly, and therefore on top of this issue consistently. To avoid major surprises, we monitor his income and investments and have all his bills set up to be paid automatically.
We wrote briefly in 2017 to highlight why the elderly represent the perfect storm for scammers, which you can access by clicking here.
This issue has not and is not going away. We’d like to share some tips to consider and also reinforce the fact that we can help. After all, in our role as advisors, we likely have more experience with family crises and best practices. And sometimes we are the first to recognize cognitive decline.
Many cases of elder fraud go unreported as victims are often embarrassed or simply unaware that anything is wrong. When family members try to raise the subject, defensiveness or even anger is common because of the fear or shame associated with diminished capacity. So it may be easier to talk through this subject with us first before broaching it with your family.
While each of us will face a different scenario—and it might not be a parent but rather a sibling or an aunt or uncle whose financial safety is at stake—here are some steps to consider taking before a crisis develops:
Step 1: Start the Conversation
Start with your own situation. You might consider including a trusted friend or family member (or even an elderly family member) just to have an extra set of eyes on your financial accounts. Ask them if they would mind getting alerts if something happens and offer to do the same for them. You can make it a two-way street just to get the conversation started. And avoid making it an all-or-nothing topic—”I need to know everything” or “You want to know everything”. Consider how much transparency feels good now and what someone would like to keep private. Starting slowly allows for comfort and growth—you can expand the transparency through time.
Step 2: Create a Plan
Remember that money is an intimate space. Budgeting and financial planning are important things to do, but we tend to react to these “constraints” emotionally. Retiring, downsizing, needing care, etc. are all different life stages. They are new circumstances that can feel hard when these transitions occur. So there is nothing wrong with acknowledging it and talking about it. Family members are often so busy with “getting it done” that we neglect a discussion of how we are all feeling about it.
For concerned family members, start slowly and don’t overwhelm. For example, in case of emergency, who are your parents’ financial professionals and trusted advisors? Who are the lawyer, accountant, financial planner, and broker? Do you have contact information for a neighbor or someone who sees your parents regularly if you have concerns? Can you share access to online accounts, so you can more openly discuss money management?
Step 3: Make Sure Documents are in Order
Getting organized begins with knowing what has and hasn’t been done. Since diminishing capacity is an aging reality that starts somewhere in mid-adulthood, we all can plan well in advance for late-in-life decline. In addition to proper, updated beneficiary designations on retirement plan accounts and insurance policies, here’s a simple list of the important documents needed: a will, a living will, separate durable POAs for health care and financial decision-making, deeds, insurance policies, investment accounts, bank accounts, income statements, retirement accounts, all outstanding loan documents, and current bills. Importantly, we need to know where these documents are stored/located.
Step 4: Be on Alert to Changes
There is no flashing red light when someone starts to lose financial capability. According to the SIFMA Senior Investor Protection Resource Center, one in five seniors (age 65 and older) have been victimized by financial fraud, and seniors lose at least $2.9 billion annually to financial exploitation. More than half of these crimes are committed by family members, friends, and caregivers.
Pay careful attention to a surviving spouse, particularly if their deceased spouse handled the finances. Financial fraud happens over time so you can prepare to address it. A key is to build a process where all family members engage in some fashion so there is greater transparency and less opportunity for abuse.
Watch for warning signs: not knowing what bills have been paid, obvious spending habit fluctuation, bounced checks, late payment charges on credit cards and not knowing whether or not taxes have been filed or even knowing what information is needed to file taxes.
Step 5: Simplify Finances
Don’t be afraid to “clean house” financially. Eliminate or at least reduce the number of credit and debit cards your loved one maintains. Review a declining family members expenses (and create a budget if necessary) and set up automatic bill-paying and direct deposit into a checking account for any income.
Role reversal: It’s not uncommon for us to see adult children paying the bills and giving their parent(s) an allowance.
Step 6: Keep Up to Date on Scams
You can just ask, “Have you heard about the latest scam?” in order to educate someone on what to look out for. Remind them regularly to never reply to any request by email, regular mail, or phone for personal information such as a Social Security or credit card number, or to pitches to purchase a product or investment that they didn’t request. Remind them that it’s ok to say “no” even when the unsolicited conversation may actually be the highlight of their day. It’s not always an outright scam, but it could be over and above what someone in their mid-80s needs or would normally afford or consume.
Make it a habit to be on the lookout and to discuss with other family members in order to have everyone watching for scams. Even just emailing/texting each other about it will create a family connection around it. Lastly, the daily mail or an email or a random conversation may be the most that an elderly individual has to look forward to some days. Nevertheless, eliminating as many calls and as much junk mail as possible is prudent. Consider signing your parents and yourself up for the National Do Not Call Registry.
Step 7: Maintain a Social Connection
Isolation is a trigger for financial problems. Remaining connected can be hard because of geography, life-pace, or family dynamics. And our own guilt about not being connected often leads us to do nothing. Even something as simple as starting family email or text chains, or calling just to talk instead of to address an issue, can nurture relationships. Any engagement is better than no engagement, so if you get a “ping” about reaching out, just do whatever you can offer. And if you’re not sure what to say or where to begin, simply asking caring questions and listening is a great place to start.
Step 8: Assign Money Management Jobs
We often see care issues being handled among family members on a divide and-conquer basis. Someone nearby may do more of the “checking in”. Someone else may monitor credit card accounts, bill-paying, and checking credit reports regularly. Another may handle taxes and/or investment accounts. There is no best strategy as long as it’s as “functional” as possible and with a common purpose.
Step 9: Monitor Accounts
There are a few handy technological tools for fighting fraud. ACM Wealth clients who are familiar with our planning process have access to an online Vault through our planning software, which is a free, secure online safe deposit box, to save digital backups of electronically scanned essential documents such as bank and investment account statements, birth certificates, insurance policies, passwords, tax records, wills, and more. Fidelity also makes a similar online vault available, called FidSafe. Another product, EverSafe, sends suspicious activity alerts, including warnings for unusual withdrawals, missing deposits, odd charges, changes in spending patterns, and much more. You might pick three or four people to get alerts. With these services, the people who are allowed access to the financial documents can be friends, a family lawyer, or biological family members. If privacy is a stumbling block, EverSafe can be set up in a way where you don’t have to reveal amounts you hold in accounts. Monthly fees range from $7.49 for up to five financial accounts to $22.99 for unlimited accounts and monthly credit reports.
Step 10: Schedule Regular Conversations
When it comes to preventing elder financial abuse, regular family conversations are crucial. It’s easy to become complacent after an issue is addressed and when you may assume that “they’ve learned their lesson”. Don’t count on it. The best way to stay engaged and on top of the situation is by scheduling something regularly. Keep a simple, but tight running agenda for these meetings (they can be phone calls) and, most importantly, don’t allow them to be a time to hash out family dynamics. Keep those conversations separate.
I like to say that “even the best investment management can be ruined by bad planning”. This reinforces the need to include eldercare planning as part of your overall financial conversation.
While these conversations are sometimes uncomfortable, a sound first step may be a discussion with us about your concerns across a range of topics and “what ifs”.
Waiting to address the issue until it occurs creates disruption and unnecessary risk. And having to react on the spot runs the risk of revealing issues involving family dynamic that serve to impede getting anything actually accomplished.
Whenever possible, we encourage you to share your concerns with us. Our experience is that it’s better to hash out the uncertainty in advance so that you can avoid complications. When family members have an opportunity to participate in the decision-making process, it opens channels of communication and builds trusts among members. All contribute to lasting family unity and we can help facilitate this with you.
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